Assessing the Social Sustainability of Frugal Products Maria Leonor Sousa Rêgo de Freitas Simões Dissertation to obtain the Master of Science Degree in Industrial Engineering and Management Supervisors: Prof. Ana Isabel Cerqueira de Sousa Gouveia Carvalho Sara Russo Garrido Examination Commitee: Chairperson: Prof. Ana Sofia Mascarenhas Proença Parente da Costa Supervisor: Prof. Ana Isabel Cerqueira de Sousa Gouveia Carvalho Member of the commitee: Prof. Carlos Manuel Pinho Lucas de Freitas June 2018 Abstract Frugal innovations are products, services, processes and business models that target underserved customers of low-mid market segments. Frugal Innovation may be seen as a new way of doing business by conceiving products and services respecting the balance between the triple bottom line pillars: Economic, Environmental and Social. Despite the fact that Frugal Innovation’s concept and boundaries often differ when taken from different perspectives, nobody argues against the statement “do more with less”, which suggests not only the market volume that Frugal Innovation aims to supply, but also the concerns on minimizing the use of resources. Since its first use in 2010, several authors from different fields have studied Frugal Innovation; however its link with Social Sustainability is still not clear in the literature. Therefore, this work intends to cope with it by presenting the Framework for Frugal Innovations’ Social Assessment (FISA). The framework was built with four types of information - which resulted by the application of a multi-methodological strategy: (1) frugal characteristics, (2) Social Value and Social Impact concepts, (3) the most significant stakeholders for Frugal Innovation, (4) the most relevant social areas to assess Frugal Innovation. By applying this framework, the social- related impacts and values are identified and measured and, as a result, the user gets information that supports the decision-making process, as FISA allows to assess the product or service stakeholder- by-stakeholder, in certain social area. Keywords: Frugal Innovation; Social Sustainability; Sustainability Assessment; Social Assessment; Stakeholders; Framework ii Resumo Inovações frugais são produtos, serviços, processos ou modelos de negócio que se dirigem a consumidores dos segmentos mais baixos do mercado (baixo e médio). Inovação Frugal é por vezes mencionada como uma nova forma de negócio uma vez que pretende conceber produtos e serviços respeitando o equilíbrio das três dimensões da sustentabilidade: económica, ambiental e social. Apesar de o conceito do termo “Inovação Frugal” não ser consensual na literatura – sendo apresentado sob diferentes aspectos e cenários, é unânime a visão de que é uma maneira de “fazer mais com menos” para mais pessoas, sugerindo o volume de mercado que Inovação Frugal pretende servir, mas também o requisito de ser sustentável no que toca à minimização de recursos e seu uso eficiente. Desde que foi referido pela primeira vez em 2010, Inovação Frugal tem sido estudada por diversos autores de diferentes áreas; contudo, a ligação do termo com Sustentabilidade Social não aparece ainda clara na literatura. Assim, este trabalho pretende contribuir para esse estudo apresentado o Modelo de Avaliação Social de inovações frugais (FISA). Modelo este que foi construído usando quatro tipos de informação – que resultaram da aplicação de uma estratégia multi- metodológica: (1) características frugais, (2) conceitos de Valor Social e Impacto Social, (3) os grupos de interesse mais importantes em Inovação Frugal, e (4) as áreas sociais mais relevantes para a avaliação de inovações frugais. Ao usar este modelo, os impactos e valores sociais são identificados e medidos, e como resultado, o utilizador obtém informação que apoia o seu processo de tomada de decisão, uma vez que o FISA permite a avaliação de um produto ou serviço para cada grupo de interesse em cada área social. Palavras-chave: Inovação Frugal; Sustentabilidade Social; Avaliação da sustentabilidade; Avaliação social; Grupos de interesse; Modelo iii Aknowledges I would like to dedicate my thesis to all young people around the world who do not have access to education due to their family’s financial conditions or their country’s political situation. Finishing my Master’s degree is such an important step in my life that doesn’t let forget about the right to education that everybody everywhere should have. Then I need to thank those persons who supported me. First, Professor Ana Carvalho who guided, advised and inspired me. And Sara Russo Garrido who welcomed me at CIRAIG where I developed the majority of my work. I would also like to thank Vera and Carolina who have been with me in Boston, USA, and Montreal, Canada, and my family and my friends who always support my projects in personal or academic life. And all others with whom I had chance to learn and discuss my work especially those I interviewed in the later stages of this dissertation. iv Table of contents 1. Introduction ........................................................................................................................................ 1 1.1 Contextualisation ..................................................................................................................... 1 1.2 Problem characterisation ......................................................................................................... 2 1.3 Dissertation objective ............................................................................................................... 2 1.4 Dissertation methodology ........................................................................................................ 3 1.5 Dissertation structure ............................................................................................................... 3 2. Literature Review ............................................................................................................................... 5 2.1 Frugal Innovation .................................................................................................................. 5 2.1.1 Definition ............................................................................................................... 5 2.1.2 Frugal Market ........................................................................................................ 7 2.1.2.1 Targeting and market potential ............................................................. 7 2.1.2.2 Positioning............................................................................................. 8 2.1.3 Aspects addressed on literature ......................................................................... 11 2.1.4 Frugal products ................................................................................................... 13 2.1.5 Frugal Innovation and Social Sustainability ........................................................ 13 2.2 Social Sustainability ............................................................................................................ 15 2.2.1 Social Sustainability Definition ............................................................................ 15 2.2.2 Corporate Social Responsibility and Social Sustainability ................................. 17 2.2.3 Social Sustainability Assessment ....................................................................... 19 2.2.3.1 Social Impact Assessment .................................................................. 19 2.2.3.2 Social Value Assessment ................................................................... 23 2.2.4 Social Sustainability Assessment for frugal innovations .................................... 25 2.3 Conclusions ........................................................................................................................ 26 3. Research Methodology ................................................................................................................... 27 3.1 Definitions ........................................................................................................................... 27 3.1.1. Literature review ................................................................................................ 27 3.1.2. Grounded Theory ............................................................................................... 28 3.1.3. Focus Groups .................................................................................................... 28 3.2. Framework constructs ....................................................................................................... 28 3.2.1 Stakeholder characterisation .............................................................................. 29 3.2.1.1 V-E-W method..................................................................................... 29 3.2.1.2 P-I method........................................................................................... 30 3.2.2 Areas of social assessment: Literature Review, Case-study analysis, and Grounded Theory ......................................................................................................... 31 3.3 Framework development: theory building .......................................................................... 33 3.4 Framework Validation: semi-structured interviews ............................................................. 33 v 4. Conceptualisation and Definitions ...............................................................................................